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  • Child Support NOA and FRO Adjustments

    Hello,

    I've scoured this forum to try and find an answer to my question with no luck, so here it goes:

    Background:

    1. I was separated in December a number of years back
    2. I paid child support from day one according to the tables
    3. My income goes up and down and we didn't really stay on top of adjustments
    4. We're going through the process of adjusting (it sort of balances out with the ups and downs, so not really off that much)

    Question:

    If you exchange T4, T1 and NOAs in June of each year should the child support adjustment be from July of that same year, then adjust each July going forward?

    Should the adjustment ever go back to January of that same year? (From what I can tell this should not occur)(i.e. if we exchange June 2014 should we adjust to Jan 2014)

    Or Should you adjust the following January allowing for any reassessments to take place, meaning that for Calendar year 2015 I would be paying based on my 2013 income?

    Thanks,
    Ottawa2

  • #2
    MOST people adjust going forward. Tax info is exchanged in June after NoA is received, and the change takes effect at the next CS payment. So you pay from July 2014 to June 2015 based on the 2013 income. Yes, this means that the payments lag the actual income, but it gets accounted for eventually. This is not too much of a problem for people with relatively steady incomes, and cost of living increases. This system can cause headaches when someone loses their job and can no longer keep up with the previous CS payments, or when someone gets a shiny new job with significantly more income, and the ex wants payments adjusted immediately. In those instances, some people adjust right away, and some wait till the next annual adjustment, based on the circumstances (ie, was the job loss due to the person's actions, is it a predictable mat leave, is the raise simply a one time bonus).

    Comment


    • #3
      Rioe,

      That you for your prompt reply. This makes sense.

      One more quick question. I had one RRSP withdrawal, only one. I needed to pay my legal fees. Would this be included in my income? I see different answers in different posts, but for me it's not a pattern, it was a one time event.

      Thanks,
      Ottawa2

      Comment


      • #4
        As far as I know, the RRSP withdrawal is part of your income (line 150 on your tax return), so yes, it does count towards calculating child support. Your support payments may go up in the year after you withdrew the money (suppose you withdrew from the RRSP in October 2013 and you exchanged tax info for the 2013 tax year in June 2014, as Rioe suggests. The impact of the RRSP withdrawal would be reflected in your payments from July 2014 to June 2015). However, if this was a one-time only increase in your income, your payments would go back down as of July 2015). However, this is not a hard and fast rule, so if you and your ex work out some other way of dealing with the temporary "bounce" in income caused by a one-time RRSP withdrawal, that's perfectly legal too.

        Comment


        • #5
          My partner when through this... he did a one time withdrawal to pay for legal fees and this amount was not counted towards his income as it was a one time thing and he has not made it a habit of withdrawing from his RRSP. He did speak to his lawyer about this when he did it and his lawyer confirmed that a one time withdrawal does not necessarily affect your CS, provided it was not a drastic amount that you took out to live off of while not working.

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          • #6
            Ditto for my partner. When he was terminated he was paid out his rrsp but it went right into his personal rrsp. Lawyer said that doesnt count as regular annual income.

            Comment


            • #7
              Hmm, okay. My only knowledge about this comes from my partner, whose withdrawal from his RRSP did get added into his income for that years for the purposes of calculating child support. But he made the withdrawal in order to pay for home repairs (rather than for reasons related to the divorce or settlement), so maybe that's the difference. And (obviously) his withdrawal went into his chequing account rather than another RRSP. This is a good example of "your mileage may vary".

              Comment


              • #8
                Theres a section on the FCSG website that talks about how you calculate when line 150 isnt a proper indicator if your income. The lawyer explained that to us. It basically says to count anything that is regular income but in some instances things were paid out that arent regular income. My partner was terminated and he was paid out income (including the RRSP the company paid) that he didnt get the rest of the year. So when we went back to do calculations on what he should have been paying, we counting all the stuff he was paid (vacation, overtime, etc.) but not the RRSP because that was a one time occurrence not found in his history of income.

                Comment


                • #9
                  **again, not legal advice, this was advice given to us for our situation. But the FCSG site is pretty clear.

                  Comment


                  • #10
                    Indeed. One time withdrawals from RRSPs aren't considered "regular income" for the purposes of the CSG and a judge would not usually count them as such.

                    If there was a history of drawing on RRSPs each year, then it would probably be added to your income.

                    Comment

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